Net profit plummeted by 86%, what exactly is going on with Li Auto?

In 2025, Li Auto achieved revenue of 112.31 billion yuan, a year-on-year decrease of 22.3%; net profit was 1.139 billion yuan, a sharp year-on-year drop of 85.8%.

On March 12, Li Auto (stock abbreviation: Li Auto-W, stock code: 2015.HK), once the sales champion among China’s new energy vehicle makers, released its unaudited financial report for Q4 2025 and the full year. Based on the financial report data, Li Auto’s performance over the past year was not very satisfactory.

In Q4 2025, the company achieved revenue of 28.775 billion yuan, down 35% year-on-year; net profit was 20.24 million yuan, down 99.4% year-on-year. For the full year of 2025, the company achieved revenue of 112.312 billion yuan, down 22.3% year-on-year; net profit was 1.139 billion yuan, a sharp year-on-year drop of 85.8%.

A relatively better aspect is that this is the third year Li Auto has been profitable, but such a large decline naturally leaves the market wondering—what exactly is going on with Li Auto?

Li Auto’s main financial performance in 2025 (thousand yuan, %) 　　 　　Source of data: Company announcement

Behind the performance decline is Li Auto’s drop in delivery volume. The financial report shows that in 2025, the company delivered 4.063 million new vehicles, down 18.5% year-on-year. This was not only far below the 700,000-unit target set at the beginning of the year, but also only reached 635,000 units versus the adjusted target of 640,000 units. As a result, Li Auto lost its position as the sales champion among new energy vehicle makers since 2024, as it was gradually overtaken by Leapmotor (9863.HK), XPeng Motors (stock abbreviation: XPeng-W, stock code: 9868.HK), and others.

Once, Li Auto established a leading advantage in the family vehicle market above 300,000 yuan by virtue of its precise positioning of the “refrigerator, color TV, and big sofa” and the extended-range technology window period. But entering 2025, its previous advantages were quickly diluted. The Wenjie M7 and M9 series, backed by Huawei intelligent driving and with starting prices of 250,000 yuan, entered the market with strong competition, directly targeting users head-on. Brands such as Leapmotor and Deepal used a “half-price Li Auto” strategy, launching high-spec extended-range models and squeezing the market below 300,000 yuan. In contrast, in terms of the 2025 Li Auto L series, during the facelift it only upgraded the intelligent driving chip, without iterating core parameters such as battery capacity and charging speed. In today’s market environment, where competitors generally achieve over 300 kilometers, a 200-kilometer pure electric range has clearly weakened its competitiveness.

Not only that, Li Auto’s pure electric route also faced a significant crisis in 2025. The flagship model for the company’s pure electric route is the MEGA. In October 2025, the company announced that the 2024 Li Auto MEGA had a risk of battery leakage due to insufficient anti-corrosion of the cooling liquid. The company recalled 11,000 vehicles. The related expense costs exceeded 1.7 billion yuan, directly resulting in a net loss of 624 million yuan in the third quarter. After that, MEGA’s monthly sales once fell from over 3,000 units to fewer than 700 units.

Aside from the above popular series, Li Auto’s subsequently launched pure electric SUV models i8 and i6 had cumulative deliveries of less than 30,000 units in 2025.

According to disclosures, Li Auto has taken a relatively cautious attitude toward deliveries in 2026. The company expects the number of vehicle deliveries in Q1 2026 to be only 85,000 to 90,000 units, a year-on-year decrease of 3.1% to 8.5%; it also expects total revenue of 20.4 billion to 21.6 billion yuan, a year-on-year reduction of 16.7% to 21.3%.

Li Auto’s vehicle delivery volume in 2025 (units)

Source of data: Company announcement

While facing challenges to its performance, over the past half year Li Auto has also frequently seen personnel changes. The former head of the second product line, Zhang Xiao; the former head of the platform/basis model team, Chen Wei; the former head of intelligent driving, Lang Xianpeng; the former head of SOC, Qin Dong; and others have left one after another. Many of these individuals are veterans of Li Auto.

In response, Li Auto founder Li Xiang said during the company’s March 12 earnings call that this is a win-win situation for Li Auto: external incubation has nurtured excellent entrepreneurial talent, while internally it has built a solid pipeline of young talent teams. This is also the core reason why the company is confident about the future decade.

Facing growth bottlenecks in its core automotive business, Li Auto has turned its attention to embodied intelligence. On January 26, 2026, Li Xiang held an emergency online all-hands meeting, where he clearly stated, “2026 is the last window period for Li Auto to become a leading AI company,” and predicted that the number of companies worldwide that can simultaneously deploy basis models, AI chips, operating systems, and embodied intelligence will not exceed 3, adding that “Li Auto needs to become one of them.” Since then, Li Xiang has clearly defined the company as an “embodied intelligence enterprise,” rather than merely an automaker.

The financial report shows that in 2025, Li Auto’s research and development investment reached a record high, with total R&D investment for the full year amounting to 11.3 billion yuan; R&D investment in Q4 was 3 billion yuan, and AI-related spending accounted for 50%. Li Auto said that it has made breakthroughs in core technological areas including self-developed chips, basis models, and full-line controlled chassis, and that an integrated hardware-software embodied intelligence technology foundation has been formed.

So, is this cross-industry path easy to walk?

From an industry logic standpoint, smart vehicles and robots are highly homologous in core technologies such as visual perception, motion planning, and decision control, and more than 60% of the supply chain can be reused, including components such as lidar, motors, and sensors. However, at present, humanoid robots still need breakthroughs in achieving fine human-like perception, and the cost per unit is far higher than that of traditional industrial robotic arms. In addition, competition in the embodied robot track is currently quite fierce. Not only have automakers such as Tesla and XPeng Motors entered the market for many years and already launched their respective related products, but there are also a large number of professional intelligent robot companies. For Li Auto, it is not easy to complete the transition and use it as a growth engine.

For its 2026 playbook, Li Xiang proposed a “3+2” strategy during the earnings call. The “3 core strategies” include doing a good job in managing the sales system; doing a good job in the upgrade cycle of the L series starting with the all-new Li Auto L9; and steadily increasing the scale of pure electric models, including Li Auto i6, Li Auto i8, Li Auto MEGA, as well as the Li Auto i9 to be launched in the second half of the year. The “2 supporting strategies” are intelligentization and going overseas.

It is worth mentioning that Li Auto has relatively strong cash reserves. As of the end of 2025, the company’s total cash and cash equivalents amounted to 101.2 billion yuan, providing a solid financial foundation for the company during the industry adjustment period.